Strong Economy? I call bullshit!

fanch75

my2hands wrote:

it has nothing to do with the skyrocketing cost of housing, energy, health care, college tuition, etc... coupled with stagnant wages. :rolleyes:

That all began 20 months ago as well.

jlew24asu

he still stands wrote:

right. I agree that it has no direct correlation with the well-being of the economy. In fact when people are spending more than they bring in it can only be interpreted asa GOOD thing from a national economic perspective. People are buying SHIT they don't need, but hey its good for all these corporations that took in record 4th quarter earnings last year.

But it does have huge implications when the economy does head south. And there are lots of signs pointing that may happen. (I personally think it is unlikely, but very possible) What would happen to the millions who lose jobs and live paycheck to paycheck with a butt load of current debt?

the stock market is in definite need of a correction. that may or may not however cause "millions" to loose their jobs. the economy is very resilient and with the current growth and strength of corporate profits, I do not see an all out recession anytime soon.

my2hands

fanch75 wrote:

That all began 20 months ago as well.

i think if we checked the various needs listed above they have all seen record inflation in the last few years, so in a roundabout way i think you are right


for the record i do not ignore the role of the consumer in this problem.

he still stands

jlew24asu wrote:

the stock market is in definite need of a correction. that may or may not however cause "millions" to loose their jobs. the economy is very resilient and with the current growth and strength of corporate profits, I do not see an all out recession anytime soon.

This time a recession wouldn't be caused by a stock market correction. It'll be caused by a major crisis in the mid-east or even in the US. I'm not a doomsday conspirasist, but its not impossible.

I think we're on the same page here though.

my2hands

kind of a strange coincidence the "Bankruptcy bill" was passed about 20 months ago? hmmmmm... sometimes it isnt all rocket science folks


The Debt-Peonage Society
By Paul Krugman
The New York Times

Wednesday 09 March 2005

Today the Senate is expected to vote to limit debate on a bill that toughens the existing bankruptcy law, probably ensuring the bill's passage. A solid bloc of Republican senators, assisted by some Democrats, has already voted down a series of amendments that would either have closed loopholes for the rich or provided protection for some poor and middle-class families.

The bankruptcy bill was written by and for credit card companies, and the industry's political muscle is the reason it seems unstoppable. But the bill also fits into the broader context of what Jacob Hacker, a political scientist at Yale, calls "risk privatization": a steady erosion of the protection the government provides against personal misfortune, even as ordinary families face ever-growing economic insecurity.

The bill would make it much harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments.

The credit card companies say this is needed because people have been abusing the bankruptcy law, borrowing irresponsibly and walking away from debts. The facts say otherwise.

A vast majority of personal bankruptcies in the United States are the result of severe misfortune. One recent study found that more than half of bankruptcies are the result of medical emergencies. The rest are overwhelmingly the result either of job loss or of divorce.

To the extent that there is significant abuse of the system, it's concentrated among the wealthy - including corporate executives found guilty of misleading investors - who can exploit loopholes in the law to protect their wealth, no matter how ill-gotten.

One increasingly popular loophole is the creation of an "asset protection trust," which is worth doing only for the wealthy. Senator Charles Schumer introduced an amendment that would have limited the exemption on such trusts, but apparently it's O.K. to game the system if you're rich: 54 Republicans and 2 Democrats voted against the Schumer amendment.

Other amendments were aimed at protecting families and individuals who have clearly been forced into bankruptcy by events, or who would face extreme hardship in repaying debts. Ted Kennedy introduced an exemption for cases of medical bankruptcy. Russ Feingold introduced an amendment protecting the homes of the elderly. Dick Durbin asked for protection for armed services members and veterans. All were rejected.

None of this should come as a surprise: it's all part of the pattern.

As Mr. Hacker and others have documented, over the past three decades the lives of ordinary Americans have become steadily less secure, and their chances of plunging from the middle class into acute poverty ever larger. Job stability has declined; spells of unemployment, when they happen, last longer; fewer workers receive health insurance from their employers; fewer workers have guaranteed pensions.

Some of these changes are the result of a changing economy. But the underlying economic trends have been reinforced by an ideologically driven effort to strip away the protections the government used to provide. For example, long-term unemployment has become much more common, but unemployment benefits expire sooner. Health insurance coverage is declining, but new initiatives like health savings accounts (introduced in the 2003 Medicare bill), rather than discouraging that trend, further undermine the incentives of employers to provide coverage.

Above all, of course, at a time when ever-fewer workers can count on pensions from their employers, the current administration wants to phase out Social Security.

The bankruptcy bill fits right into this picture. When everything else goes wrong, Americans can still get a measure of relief by filing for bankruptcy - and rising insecurity means that they are forced to do this more often than in the past. But Congress is now poised to make bankruptcy law harsher, too.

Warren Buffett recently made headlines by saying America is more likely to turn into a "sharecroppers' society" than an "ownership society." But I think the right term is a "debt peonage" society - after the system, prevalent in the post-Civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to those bad old days all by itself, but it's a significant step in that direction.

And any senator who votes for the bill should be ashamed.

---

Go to Original

Bankruptcy Bill Set for Passage; Victory for Bush
By Stephen Labaton
The New York Times

Wednesday 09 March 2005

Washington - The Senate assured final passage of the first major overhaul of the nation's bankruptcy laws in 27 years on Tuesday, when it took two votes that cleared the remaining political obstacles to a measure that the nation's credit and retail industries have sought for years.

The bill would disqualify many families from taking advantage of the more generous provisions of the current bankruptcy code that permit them to extinguish their debts for a "fresh start." It would also impose significant new costs on those seeking bankruptcy protection and give lenders and businesses new legal tools for recovering debts.

The Senate on Tuesday first defeated an amendment that would have prevented violent protesters at abortion clinics from using the bankruptcy laws to shield themselves from judgments awarded in civil lawsuits. That amendment, which lost by a vote of 53 to 46, had threatened to derail the legislation. The senators then voted 69 to 31 to limit debate and cut off any effort to kill the legislation by filibuster.

Final passage of the measure is now an inevitable formality.

House leaders have said they will quickly approve the legislation once the Senate completes work on it as early as this week. President Bush has said he intends to sign it. His predecessor, President Bill Clinton, killed the measure in his final days in office in 2000 after it had been passed by Congress by declining to sign it at the end of the legislative session, issuing a so-called pocket veto.

The sponsors of the legislation say that it will have the effect of lowering the costs of goods and services for all consumers by making it easier for companies and issuers of credit to collect unpaid debts rather than passing those costs on to everyone else. In the last 30 years, bankruptcy filings have steadily increased, rising eightfold since Congress last rewrote the bankruptcy laws.

But critics said the measure was a thinly disguised gift to banks and credit card companies, which, they contend, are largely responsible for the high rate of bankruptcies because they heavily promote credit cards and loans that often come with large and largely unseen fees for late payments. They said that the measure would impose new obstacles on many middle-income families seeking desperately needed protection from creditors, and that it would take far longer for those families to start over after suffering serious illnesses, unemployment and other calamities.

The votes on Tuesday were the second legislative victory in recent weeks both for Mr. Bush and the Senate majority leader, Bill Frist, himself a possible presidential contender in 2008. Mr. Frist nimbly moved both the bankruptcy bill and another bill last month making it more difficult to bring class-action lawsuits through the Senate.

In both cases, he unified the Republicans to beat back every effort by the Democrats to water down or delay the measures. In both cases, he also reached a deal with House leaders in which the Senate blocked any significant changes to the measure in exchange for a commitment from the House that it would adopt unaltered what the Senate approved.

The White House applauded the votes on Tuesday.

"The administration supports the passage of bankruptcy reform because ultimately this will lead to more accessibility to credit for more Americans, particularly lower-income workers," said Trent D. Duffy, a deputy White House spokesman. "The fact that the Senate was able to set aside those issues and move toward passage shows it's another bipartisan accomplishment. Coupled with class actions, it shows we're off to a good start."

The sponsors of the bankruptcy legislation say it is a badly needed measure to curb a growing number of abusive bankruptcy filings by individuals who ought to be able to meet their obligations. Those cases, supporters of the measure say, have added hundreds of dollars in annual costs to other consumers who wind up having to pick up the unpaid debt.

"We are a compassionate nation but we should not be fools," said Senator Orrin G. Hatch, a Utah Republican who has fought for the measure for eight years. "We want to give our neighbors who get in over their heads a chance to get out of their financial troubles. But for some it is a way to avoid personal responsibility. There is something inherently unfair about denying full restitution to creditors."

Supporters of the new law point to the rise of bankruptcy filings, from 200,000 in 1978 to 1.6 million last year, as evidence of abuses.

But critics of the measure say that the rise in such filings is not evidence of unfair filings. Rather, they say, it is symptomatic of broader economic problems - the growing distress in families plagued by high health care and education costs. A recent study by bankruptcy and medical experts at Harvard University found that more than half of the 1,771 personal bankruptcy filers in five federal courts cited medical bills as a primary reason they filed.

The critics - including consumer groups, Democrats and more than 100 bankruptcy law professors - say that the legislation's supporters have significantly exaggerated the problem with the current bankruptcy laws. They say the legislation will do far more damage than good by hitting middle-income families, women and the elderly who have used bankruptcy protection in growing numbers to protect themselves.

"This bankruptcy bill is mean-spirited and unfair," said Senator Edward M. Kennedy, Democrat of Massachusetts. "In anything like its present form, it should and will be an embarrassment to anyone who votes for it. It's a bonanza for the credit card companies, which made $30 billion in profits last year, and a nightmare for the poorest of the poor and the weakest of the weak."

In a letter to Congress two weeks ago, 104 bankruptcy law professors predicted that "the deepest hardship" would "be felt in the heartland," where the filing rates are highest - Utah, Tennessee, Georgia, Nevada, Indiana, Alabama, Arkansas, Ohio, Mississippi and Idaho.

Critics also said the measure fails to do anything to curb abusive bankruptcy practices by wealthy families, who can create special trusts to shelter their assets, and by corrupt companies like Enron and WorldCom, which were able to find favorable bankruptcy courts and deprive many of their employees and retired employees of benefits. The Senate defeated a series of amendments proposed by Democrats that sought to address those issues.

"The bill has a real bias," said Senator Charles E. Schumer, Democrat of New York, whose proposal to close a loophole that permits wealthy people to shelter assets through a special trust was defeated last week. "It deals with abuses in bankruptcy by one group but not with another group."

The lobbying money for the legislation, which has come close to passage several times in the eight years since it was introduced, has been lopsided.

The main lobbying forces for the bill - a coalition that included Visa, MasterCard, the American Bankers Association, MBNA America, Capital One, Citicorp, the Ford Motor Credit Company and the General Motors Acceptance Corporation - spent more than $40 million in political fund-raising efforts and many millions more on lobbying efforts since 1989, according to the Center for Responsive Politics, a nonpartisan organization that studies the role of money in the political process. By definition, the critics of the legislation had limited lobbying resources.

The foundation of the legislation is a provision that would limit access by individuals to Chapter 7 of the bankruptcy code. It enables individuals to sharply limit payments on their obligations and get a "fresh start."

The bill would instead impose a means test that would prompt many people to file for bankruptcy protection under Chapter 13, which requires a repayment plan. The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that and can pay at least $6,000 over five years would have to seek protection under Chapter 13.

The median income for a family of four in 2003 was $65,093, ranging from $45,867 in New Mexico to $82,561 in Massachusetts, according to the United States Census Bureau.

The bill would also increase the costs of bankruptcy by increasing the amount of paperwork filed and force people in bankruptcy to pay for counseling about the way they use credit. It would also make it more difficult for some people to try to shelter their assets through the purchase of expensive homes in states like Florida and Texas, which have homestead exemptions. To shelter more than $125,000 in assets, homes must have been purchased at least three and a third years before a bankruptcy filing.

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jlew24asu

he still stands wrote:

This time a recession wouldn't be caused by a stock market correction. It'll be caused by a major crisis in the mid-east or even in the US. I'm not a doomsday conspirasist, but its not impossible.

I think we're on the same page here though.

yea I agree. dont worry, predicting another crisis doesnt make you a doomsday conspiracist. crazy shit is bound to happen.

know1

I think filing bankruptcy just because you piled up high credit card debt buying junk is shameful and shouldn't be allowed. People should pay back what they owe.

It's a different story if you had a crisis or major illness, etc. and truly cannot pay.

jlew24asu

know1 wrote:

I think filing bankruptcy just because you piled up high credit card debt buying junk is shameful and shouldn't be allowed. People should pay back what they owe.

It's a different story if you had a crisis or major illness, etc. and truly cannot pay.

I think in the last few years bankruptcy laws have gotten alot tougher.

farfromglorified

know1 wrote:

It's a different story if you had a crisis or major illness, etc. and truly cannot pay.

Why?

he still stands

farfromglorified wrote:

Why?

I thought it was intuitive as to why its different...

farfromglorified

he still stands wrote:

I thought it was intuitive as to why its different...

Then I have no intuition. Care to explain how it's different?

onelongsong

he still stands wrote:

right. I agree that it has no direct correlation with the well-being of the economy. In fact when people are spending more than they bring in it can only be interpreted asa GOOD thing from a national economic perspective. People are buying SHIT they don't need, but hey its good for all these corporations that took in record 4th quarter earnings last year.

But it does have huge implications when the economy does head south. And there are lots of signs pointing that may happen. (I personally think it is unlikely, but very possible) What would happen to the millions who lose jobs and live paycheck to paycheck with a butt load of current debt?

people incurring large amounts of debt makes the economy "appear" better than it is.

throughout history; when an economy does go south; people ignore all but the important bills. for example; if i lose my job and i owe you money; are you willing to pay a lawyer to sue me and get a worthless judgment?

baraka

farfromglorified wrote:

Then I have no intuition. Care to explain how it's different?

ha ha! Maybe you could explain how it is the same........

farfromglorified

baraka wrote:

ha ha! Maybe you could explain how it is the same........

Ok. In both cases you've promised to exchange payment for the labor or goods of others. And in both cases you've defaulted on your promise.

know1

farfromglorified wrote:

Why?

I know technically it's not, but it's at least more excusable to my mind if the bankruptcy comes as a result of a personal tragedy rather than just consuming until you can't make the payments.

My comment was mostly to say that I think most people who file bankruptcy for situations that didn't involve personal tragedy are no better than criminals.

NCfan

know1 wrote:

Funny, but our culture didn't make me feel that way. I guess it's not really a culture issue then...

Culture is bigger than one person. I never really thought much of late 90's pop music, but hey there is no denying that was our culture then, right?

Rats of Multa

know1 wrote:

I know technically it's not, but it's at least more excusable to my mind if the bankruptcy comes as a result of a personal tragedy rather than just consuming until you can't make the payments.

My comment was mostly to say that I think most people who file bankruptcy for situations that didn't involve personal tragedy are no better than criminals.

you're assuming "criminals" are worse than "ordinary" folks,..

ALL economy [economics] has its foundation in the rape of Nature.

farfromglorified

know1 wrote:

I know technically it's not, but it's at least more excusable to my mind if the bankruptcy comes as a result of a personal tragedy rather than just consuming until you can't make the payments.

My comment was mostly to say that I think most people who file bankruptcy for situations that didn't involve personal tragedy are no better than criminals.

Ok -- that's fair. Certainly one is much more understandable than the other. However, the forced protection from either debt, in my opinion, is justifiable.

farfromglorified

Rats of Multa wrote:

you're assuming "criminals" are worse than "ordinary" folks,..

They are, assuming those ordinary people aren't criminal.

ALL economy [economics] has its foundation in the rape of Nature.

Of course. All death has its foundation in the reverse.

NCfan

my2hands wrote:

you guys are right... it is the american publics fault, the era of "keep up with the jones'" just began 20 months ago :rolleyes:

it has nothing to do with the skyrocketing cost of housing, energy, health care, college tuition, etc... coupled with stagnant wages. :rolleyes:

You make a great point here, and it speaks to the current state of our culture. Think about this, skyrocketing cost of housing, energy, heath care, college tuition, etc... coupled with stagnant wages AND a freakin WAR.

Yet, what do we do as Americans? I'm not talking about the poor who don't have many choices. I'm talking about the middle class. We go out and spend more than we earn! We refinance and run up credit card debt.

A lot of people aren't buying presciption drugs on there credit cards. But, I bet a hell of a lot of Americans go buy a $4 cup of coffee at Starbucks on their credit card.

The point is, it's all about luxury now... more than ever - everything has to be THE BEST!!!

This is at least, my interpretation of where our culture is headed and what we value. It's money, it's status... these are the things we value. And the more of it you have and show, the more value you have as a member of your community.

For instance, maybe it is just me and its a part of growing up.... but I can't remember a time when designer jeans and purses were in such high demand. Look at all the knock-off products you can buy now....

It seems that Gucci and Prada are as much a part of the American lexicon as apple pie and baseball. Just look at MTV or VH1... they used to play music. Now it's all reality shows about famous people. It's all about celebrities and how they spend their money....

It sucks... I'm 26 and already feel like our country is going to hell in a hand basket. I thought I would at least need to have grandkids before I felt that way.